Reasons Why Start ups Fail in India?



Start-up India is a flagship initiative launched by government in August, 2015. The main objective behind Start-up Scheme was the development & innovation of products & Services & to increase the rate of employment in India. But most of the Start-ups are continuously struggling to survive. In this blog, we will discussing brief – why most Start-ups fails & what are the reasons behind their failure.

A major reason for the failure is the business model, which is followed by most of the Start-ups these days;

  • A group of youngsters come up with an idea of business.
  • The idea is being presented in front of Venture Capitalists to get funds.
  • Above Start-up funds is used to offer discounts just to gain customers at a fast pace.

Nowadays, most of the start-ups are growing business by offering more discounts as compared to their competitors. But they are doing so, from the funds which they are getting from venture capitalists. By doing so, they are incurring a huge loss. Most of them do not want to run the business, they just want to build their customer database, sell the business to someone & run away.

Most of the Start-ups are not following the objective behind the scheme. They are reaching customers because of artificial discounts on products & services instead of better quality of products & services, which cannot be offered for long time. If discount is removed from products & services & offered at market price, they will start losing customers. Other than the artificial discounts, there are many more reasons as why most of the Start-ups fails. Few are mentioned below;

The Right Product

Start-ups are not solving the market problem. The product which customers are expecting from the market is being failed to develop. Every Start-up should focus on the single most important aspect, i.e. the Right Product. Even though Start-ups have great Customer data, Reputation, Leader, Expertise, Advisors, etc., but what they do not have is the technology or the business model with the right product, that can solve the market need or problems. Many times, the product first launched to the market, does not meet the market need.

Running out of Cash

Another major aspect that most of the Start-ups face is the shortage of funds. Every Start-up should maintain the strategy on how much funds are left & whether they are sufficient to carry their business to a milestone that can lead to successful financing. Most Start-ups has scaled well, but they are not able to raise the additional funds to further extend the business and hence have to shut down due to running out of cash.

Poor Management Team

The most common problem that causes failure to Start-ups is not having the right Team. Weak team managements make mistakes in certain areas;

  • Poor Strategies- There strategies are poor, as they build the product that no one wants to buy. They fail to do the work which validate the ideas before & during the product development.
  • Poor Execution- Weak management teams are poor at the executional level which delays in building the product or build incorrect products which will affect the marketing team& hence market execution will be poorly implemented.

No Customer Service

Most Start-ups really don’t care about serving their customers well. They target new customers every day. Start-up these days are busy too much in developing the product & ignoring the feedback from customers’ prospectus. This ignorance to customer service will prevent them of loyal customers, which again leads to the failure in long term.

Poor Marketing

Knowing the target audience & knowing how to get their attention & converting them into the final leads is one of the most important skills of every organization. But an inability to market is a common failure especially among the founders, who liked to build the product, but do not promote the product in the market. Even after achieving the right product effortlessly, many Start-ups fail due to lack of is marketing.

Lack of Unique Ideas

Most of the Start-ups copy the idea of their competitor & try to gain customers by selling products at discounted or less rates. Because of no competitive edge among others, most of the Start-ups fail.

Looking for Shortcuts

Most of the Start-ups fail, because of their impatience nature. It is mostly seen in young entrepreneurs, who wants overnight success. There are few companies that have become successful within 5-10 years. But if Start-up looks for short-cuts, they are most likely to fail.


It is definitely inspiring to see how Indian youth wants to become entrepreneurs. But to successfully uplift the Start-up in India, young entrepreneurs need some basic skills, a long-term mind-set to run the business with proper guidance. It is always advisable to look out for an entrepreneurship mentor who can handhold you in uplifting your journey to build a successful business.

Manthan Experts assists you right from the idea generations of any business till its execution and even beyond that for every business need. We assure you that “If we cannot help you build a start-up no one can” and we are a “One-Stop Platform for Upcoming Entrepreneurs”. So choose Your Trustworthy Advisors –Manthan Experts.

Knowledge Source:

Start-up India Scheme – Eligibility – Documents

MSME Registration in India – Procedure, Benefit

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